SHAPING GREENLAND'S FUTURE

UNCLAS SECTION 01 OF 04 COPENHAGEN 001010 SIPDIS SENSITIVE SIPDIS STATE FOR P, M, A, OES, PM, EEB, EUR, EUR/EX AND EUR/NB STATE PLEASE PASS NSF, NASA, AND USGS NSC FOR ANSLEY AND GERMANO SECDEF FOR OSD-POLICY - CATE EUCOM FOR J-5, J-2, AND POLAD COMMERCE FOR MAC/ITA - DACHER AND MARKOWITZ E.O. 12958: N/A TAGS: PREL PGOV KENV SOCI ETRD EFIN DA SUBJECT: SHAPING GREENLAND'S FUTURE Ref: (A) 2004 COPENHAGEN 1835 (B) State 147776 ¶1. (SBU) This cable contains sensitive but unclassified and proprietary business information. Not for internet publication. ¶2. (SBU) Summary: Greenland is on a clear track toward independence, which could come more quickly than most outside the Kingdom of Denmark realize. By 2009, Greenlandic and Danish politicians will complete a new self-rule agreement, the penultimate step toward full independence. Significant oil, gas, and mineral resources -- forecast by experts but not yet proven -- could propel the Greenlanders after that to ultimately sever their formal ties to Denmark. ¶3. (SBU) With Greenlandic independence glinting on the horizon, the U.S. has a unique opportunity to shape the circumstances in which an independent nation may emerge. We have real security and growing economic interests in Greenland, for which existing Joint and Permanent Committee mechanisms (described reftel A) may no longer be sufficient. American commercial investments, our continuing strategic military presence, and new high- level scientific and political interest in Greenland argue for establishing a small and seasonal American Presence Post in Greenland's capital as soon as practicable. End Summary. High Stakes for the U.S. in Greenland -------------- ¶4. (SBU) With the planet's fastest moving glaciers, Greenland is an iconic adventure destination for hardy Congressional delegations and down-encased journalists looking for visual proof of climate change. Its gleaming icebergs will be the backdrop for a May 2008 ministerial hosted by Denmark on Arctic issues (reftel B). But Greenland holds strategic value for the United States beyond its starring role in the global narrative of climate change. The world's largest island, this remote and sparsely-populated territory of Denmark is three times the size of Texas but home to just 56,000 inhabitants. A U.S. Air Force base at Thule, 500 miles north of the Arctic Circle, hosts important radar that alerts us to incoming missiles over the Pole. American investors are poised to commit $5 billion this year to develop hydropower and smelting facilities there. Exploration and development of Greenland's energy resources are just now beginning in earnest, with enormous potential for American industry. ¶5. (SBU) Thanks to the Joint Committee process launched with the 2004 Igaliku agreements to expand bilateral cooperation in non-defense areas, we have reassured sometimes skeptical Greenlanders of our good will and interest in partnership. Although part of the Danish kingdom and traditionally oriented toward Europe, Greenland nevertheless has a growing appreciation for the logic of geography and its own potential as part of North America. Our international visitor invitations, English teaching programs and joint scientific/environmental projects have reinforced Greenlandic desires for a closer relationship with the United States, just as Greenland assumes ever-greater charge of its international relations and edges closer to full independence. Our intensified outreach to the Greenlanders will encourage them to resist any false choice between the United States and Europe. It will also strengthen our relationship with Greenland vis-a-vis the Chinese, who have shown increasing interest in Greenland's natural resources. From "Home Rule" to "Self Rule" -------------- COPENHAGEN 00001010 002 OF 004 ¶6. (U) Greenland has been self-administered under a "home-rule government" since 1979. Greenland's government and parliament control almost all matters except defense and certain aspects of foreign policy, law enforcement, and mineral resources, which currently remain under the authority of Copenhagen. ¶7. (U) A "self-rule commission," established in 2004 by Danish Prime Minister Anders Fogh Rasmussen and Greenland Home Rule Premier Hans Enoksen, will soon complete a new self-rule agreement, devolving additional authorities and autonomy. The new agreement will be submitted to Danish and Greenlandic parliaments for ratification sometime in ¶2008. Following ratification and approval by referendum in Greenland, the new arrangement is expected to enter into force in 2009 on the 30th anniversary of the original home-rule agreement. ¶8. (U) The self-rule agreement will cede to Greenland additional powers in foreign relations, justice and home affairs, and is the next-to-last step toward full Greenlandic independence. The agreement will also hammer out important economic and financial arrangements regarding sharing of hydrocarbon and mineral profits, revenue essential to Greenlandic independence. Energy-Rich Greenland? -------------- ¶9. (SBU) Negotiations on the division of Greenland's potential hydrocarbon and mineral wealth proved more difficult to solve than expected, delaying conclusion of the self-rule agreement by several months. While Greenland has long been believed to possess significant hydrocarbon and mineral stocks, only in the last three to four years -- with the rise in world oil prices -- have international investors have begun to seriously explore Greenland's potential. ¶10. (U) The Greenland government earlier this year issued its first licenses for oil and gas exploration off the western Greenlandic coast, with Chevron and Exxon-Mobil part of the four-company international consortium that won the concession. Additional exploration licenses are expected to be granted later this year. ¶11. (U) A recent study of hydrocarbon potential, led by the U.S. Geological Survey, concluded the continental shelf off northeast Greenland alone could harbor oil and gas reserves to rival Alaska's North Slope. The USGS will complete additional studies on similarly promising areas in northern and western Greenland next year. After a thousand-year interval of cooling, average temperatures in Greenland have in this century climbed to the level they were during the first Viking settlements of 986 AD. Whether because of man-made climate change or a massive, cyclical shift in weather patterns, Greenland's carbon riches are more easily accessible now than ever. ¶12. (U) Meanwhile, the resource possibilities in Greenland are not limited to oil and gas. The Greenland government has issued 68 mineral exploration licenses to international companies, and expects at least five significant new mines to open in the next five years, harvesting everything from diamonds and rubies to molybdenum and zinc. ¶13. (U) The upcoming self-rule agreement will effectively split oil and gas revenue between the Greenlandic and Danish governments, with the Danish share used to offset the annual block grant to Greenland. (Greenland depends on an annual 500 million dollar subsidy, making up about half of the state budget.) Increased hydrocarbon revenue COPENHAGEN 00001010 003 OF 004 would eventually eliminate the Danish block grant. After that payback, all revenue would belong to Greenland. A Deliberate Approach to Independence -------------- ¶14. (SBU) One senior Greenlandic official commented recently that his country (Greenlanders and many Danes alike routinely refer to Greenland as a "country") is "just one big oil strike away" from economic and political independence. This remark captures the sentiments of most Greenlanders, who enthusiastically support independence but recognize that it may not be possible until the territory first reaches economic self- sufficiency. Even the most ardent of Greenlandic nationalists concede that there is no public appetite for achieving independence at the cost of eliminating the generous Danish subsidy that, for now, guarantees the island's economic viability. ¶15. (SBU) Denmark's approach to Greenland's aspirations for ever-greater sovereignty, meanwhile, has been balanced and largely pragmatic. Most Danish politicians understand and accept that Greenland is slowly moving toward independence. Some privately question whether the Danish public will readily let go of a former colony that has long since become a part of Danish national identity and myth. Others would be glad to see an end to the block grant, funds that would otherwise be spent in continental Denmark. ¶16. (SBU) The Danish-Greenlandic relationship, while complex and sometimes bumpy, rests on a shared assumption of eventual independence for Greenland. Even as Greenland's political elites negotiate ever more autonomy, most Greenlanders, for now, seem satisfied with seeking independence at a thoughtful and measured pace -- at least until that one big oil strike. U.S. Engagement with Greenland -------------- ¶17. (SBU) Our growing security and economic interests in Greenland demand that we work to ensure that eventual independence has a positive effect on those interests and on the broader transatlantic relationship. Our radar at Thule is now being upgraded for use in missile defense, while the base there also carries out important satellite command and control functions for the United States. U.S. trade and investment in Greenland is growing, with a multi-billion-dollar aluminum smelter and hydroelectric project planned by Alcoa and new oil and gas exploration underway by major U.S. firms. ¶18. (SBU) The Joint Committee process has expanded cooperation among the U.S., Greenland and Denmark, transforming U.S. relations with Greenland with an impressive list of achievements. The Joint Committee has promoted scientific collaboration, educational and cultural exchanges, tourism (including a new direct U.S.- Greenland air link) and direct investment (Alcoa officials attribute much of their success to the Joint Committee). Greenlandic officials praise the Joint Committee process for its concrete results and for helping to put Greenland "on the map" in Washington. The Next Step: An American Presence Post -------------- ¶19. (SBU) Despite our success to date, the demands and stakes of our relationship with Greenland will continue to grow. With Greenland moving closer toward independence, the Joint Committee process and our current level of contact with Greenland officials may simply not COPENHAGEN 00001010 004 OF 004 be enough. Sustaining and building on our achievements in Greenland require engagement and outreach that can only be accomplished in-country, on the ground. We would like to create a small and seasonal American Presence Post (APP) in Nuuk, Greenland's capital, as soon as feasible. ¶20. (SBU) Greenlandic officials frequently raise with us the possibility of an American diplomatic presence and would enthusiastically welcome such a move, perhaps with material and logistical support. Foreign representation remains scant in Greenland, making the impact of a U.S. office all the greater. We believe that the Danish government would approve our opening an APP in Greenland, following appropriate consultations and diplomatic communication. ¶21. (SBU) An American Presence Post in Greenland would provide us with the needed diplomatic platform to seek out new opportunities and advance growing USG interests in Greenland. Nuuk is Greenland's largest city and the seat of the government. Nuuk also provides relatively easy access to Greenland's major air hub in Kangerlussuaq and from there to Thule Air Base and the town of Ilulissat, a favorite for the growing number of Congressional delegations now visiting Greenland. (Summer 2007 saw three separate, large delegations, including one led by House Speaker Nancy Pelosi). ¶22. (SBU) We propose to staff an APP office from post's current complement of American direct-hire officers. We currently have four Foreign Service officers with some aspect of relations with Greenland as part of their portfolio. We would staff an APP office in Nuuk for five months of the year, beginning in June (for the beginning of the scientific research and Congressional travel seasons) and extending through October (which would allow time for interaction with the Greenlandic parliament, which usually begins its activities in mid-September). We would send one Embassy Copenhagen officer to Nuuk for one-month rotations. Post already maintains an American Corner in Nuuk, which we could use as an anchor for representational and cultural programming events. Post is prepared to submit APP cost estimates for the Department's review. Costs to be funded by the Department would include five months of TDY support plus set-up costs. We would explore with the Greenlandic government whether they could also contribute office space or other cost offsets for an APP. Post can also work with our colleagues in the Embassy's USAF Detachment 1 office (which handles contracting for Thule Air Base), to leverage their existing resources and infrastructure in Greenland and minimize costs. ¶23. (SBU) The time is now to begin investing in a flexible, low-cost, official U.S. presence in Greenland. Establishment of an APP in Nuuk would allow us to advance our strategic and commercial agenda directly and to shape the image of the U.S. in Greenland as never before. For now, we can offer Greenland an American perspective. Down the road, we must be prepared for the day when we welcome a new and independent neighbor, one that will be a true partner within the transatlantic community of the 21st century. CAIN